Construction materials costs outpace completed buildings costs
The cost of materials used in construction increased significantly faster than the price of completed buildings, according to a new analysis of federal producer price data released by the Associated General Contractors (AGC) of America. AGC officials warn potential restrictions on the use of imported construction materials threaten to boost the price of infrastructure, buildings, and new homes and apartments.
"Steep price hikes have hit a wide range of key materials used in construction in the past few months, and contractors have received numerous letters from vendors announcing large additional increases in the next month or two," says AGC Chief Economist Ken Simonson. "Contractors cannot pass these costs along on projects already underway, and the data show they are not yet able to price new buildings at a level that reflects their rising materials and labor costs."
From January 2016 to January 2017, there was a 3.8 percent increase in the producer price index for goods used in construction. Another government report showed average hourly earnings for all workers in construction climbed 3.2 percent during the same period. The price index for new nonresidential buildings—what contractors charge for their work—increased only 1.4 percent.